In a sea of misery and general economic depression, it’s good to see that the humble ISA has brought some cheerier news by creating an unexpected plethora of new millionaires.
The latest figures are encouraging and I’m grateful to analysis by Rathbones, money app Plum and others.
According to analysis by Plum, there are now over 5,000 ISA millionaires in the UK. In contrast in 2016 there were only 450.
The fact is that long term tax incentivised equity investing, apart from a few bumps and hurdles on the way, has proved to be a good place to put savings.
More interestingly, analysis by money app Plum reveals many ISA users are actually multi-millionaires.
Of the 5,070 ISA millionaires recorded in the 2023 figures, 4,800 had an ISA portfolio valued at £1m-£2m, while 200 had pots between £2m-£3m and 30 had pots £3m-£4m. There were even 50 investors with pots of more than £4m.
These are impressive figures and should remind the Treasury of the value of a long term, tax incentivised savings plan and the need to avoid ‘fiddling’ with it. Unfortunately, the ISA’s success makes it a prime target for the Treasury to eventually tap for revenue.
I hope that day never comes because the ISA has persuaded an army of small investors, often encouraged by their Financial Planners, to enjoy its tax free status and make money for their general financial improvement, retirement or whatever they want to spend it on.
ISAs are also, rightly, often part of sound Financial Planning these days and I wonder how many of those ISA millionaires have received professional financial advice. Quite a few I suspect.
The ISA should provide a template for how a successful savings scheme can work.
In a week when the FCA announced that it would shake up the advice sector by scrapping the requirement for annual reviews and introduce proposals for simplified advice, the success of ISAs is a reminder that sometime the government can get it right and we should provide praise when it’s due.
The US and Israeli attack on Iran has upset many equity markets and knocked the froth off share prices recently but I’ve no doubt some of these canny ISA investors have seen buying opportunities and good luck to them.
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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and mainstream news. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days. Email:
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